China Delays Consumption Tax on Gasoline Blend Components: Traders

China has delayed the introduction of a consumption tax on a range of products including MTBE, which had been sent for January 1, Asian MTBE traders said Friday.

While the length of the delay was not clear due to a shortened work week in China, one trader said the revised implementation date could be in July.

Consumption of MTBE in China had been scheduled to be subject to a tax of Yuan 1/liter, or $160/mt, starting January 1.

The delay was welcomed by traders, who said the market was still too quiet for its impact to be seen.

One Chinese trader said the country could be positioning itself to start exporting MTBE to Europe, but even with an open arbitrage, MTBE would have to compete against cheaper alternatives like ETBE.

MTBE is a gasoline additive used as an oxygenate to raise the octane number. China consumes an estimated 200,000 mt/year of MTBE sourced from local producers, the Middle East, and Europe on occasion, and is a net importer of MTBE.

Traders said the imposition of the tax would have detrimental effect on the market, with the possibility of imports being reduced significantly as Chinese blenders sought to purchase cheaper alternative blend components.